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The Sixth Circuit affirmed the lower court. To be held liable under the ACPA, one must have a “bad faith intent to profit,” the court noted. The ACPA applies to all domain names registered before, on, or after the enactment of the law on November 29, 1999. However, actual and statutory damages are not available for violations that occurred before that date, the court said. Catalanotte contended that he could not be liable for damages since he had registered the domain name before the ACPA was enacted. Ford countered that Catalanotte could be held accountable for “trafficking in” the domain name after the law was passed. The Sixth Circuit agreed with Ford. Registering, trafficking, and using a domain name are separate offenses upon which liability can be premised, the court held. “Although damages may not be awarded for pre-enactment registration, trafficking, or use, the fact that a domain name was registered before the Act's passage does not absolve the registrant from liability for post-enactment trafficking or use,” the court explained.

Punitive Damages Award to Black Deputy Sheriff Reinstated

Affirming a finding of race discrimination, the Ninth Circuit has reinstated in full an award of punitive damages to the first black deputy sheriff in Clackamas County, OR. Bell v. Clackamas County, 2003 WL 22025134 (Aug. 20).

Carl Bell worked as a Lake Oswego police officer from February 1, 1996 until December 28, 1997 in Clackamas County. He was the first black deputy sheriff in county history. During the course of Bell's employment, his field training officer, Jeff Davis, allegedly encouraged Bell to engage in racial profiling in stopping cars, and made a number of remarks about African-Americans and other racial and ethnic minorities, as well as immigrants. Bell was later fired and he sued under Title VII, alleging that his employment had been terminated because of his race and in retaliation for his complaints on discrimination and racial profiling. A jury found for Bell and awarded damages totaling $1.4 million, including punitive damages of $250,000 against the chief deputy, and $52,000 against each of seven deputies. Subsequently, however, a judge struck down the judgment against the chief deputy, reduced the punitive damages to the others to $10,000 each, and reduced the hourly rate of the attorneys' fees, but awarded Bell $216,000 in attorneys' fees. When the county appealed, Bell cross-appealed the reduction in damages.

The Sixth Circuit upheld the jury's verdict, finding that Clackamas County's contention that the record contained no evidence of illegal retaliation to be “wholly without merit.” “[T]he temporal proximity between Bell's complaints and alleged adverse employment actions,” the court reasoned, “together with evidence of [two deputies'] contemporaneous displeasure with Bell's complaints regarding racial comments and racial profiling, provides strong circumstantial evidence of retaliation.” The court held that a jury could have “reasonably inferred” from the record evidence that the deputies shared Bell's complaints with others at a disciplinary meeting. Although Bell had previously received good reviews and positive feedback, he was given poor marks after that meeting. No notes were taken during the meeting; this fact suggested “an intent to conceal the purpose of the meeting,” the court said. “In sum, Bell offered specific and substantial circumstantial evidence in support of the jury's determination that he was terminated because of his complaints.” Accordingly, the court affirmed the jury's findings and reinstated its damages and attorneys' fees awards to Bell.

At-will Employee May Bring ' 1981 Race Claim in Seventh Circuit

Joining the Second, Fourth, Fifth, Eighth, and Tenth Circuits, the Seventh Circuit Court of Appeals has held that an at-will employee may proceed on a race discrimination claim under the Civil Rights Act of 1866, codified at 42 U.S.C. ' 1981. Walker v. Abbott Labs., 2003 WL 21956455 (Aug. 18).

In 1997, Ronald Payne, a former employee of Abbott Labs, filed a lawsuit on behalf of himself and all similarly situated African-American employees at the company. A four-count second amended complaint added Dennis Walker and Marvin Fields as new class representatives, was filed in June 1998. The second amended complaint alleged class claims for intentional race discrimination under Section 1981 and for disparate impact under Title VII of the 1964 Civil Rights Act. Important to the eventual appeal, the complaint did not allege Title VII disparate treatment. In addition, Walker and one other named plaintiff raised individual claims for intentional race discrimination in promotion and pay under Section 1981 and another employee included a Section 1981 retaliation claim, the court said. Abbott Laboratories moved in March 1999 to dismiss the Section 1981 claim on the grounds that plaintiffs failed to plead the contractual basis necessary to such a claim because they were at-will employees.

Ruling on an issue of first impression in the Seventh Circuit, the Court of Appeals held that at-will employees such as Walker could proceed on a Section 1981 claim nonetheless because their at-will employment was still sufficiently contractual in nature. Section 1981 provides that “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts … as is enjoyed by white citizens.” In Patterson v. McLean Credit Union, the Seventh Circuit observed, “the Supreme Court took a narrow view of the phrase 'make and enforce contracts,' holding that it meant ' 1981's protections extended only to the formation of a contract and not to conduct occurring after the contract was made.” The Civil Rights Act of 1991 abrogated that part of McLean when it made clear that Congress intended Section 1981's protections to extend beyond contract formation only. Citing its own precedent, the court reasoned that “[e]mployment at-will is not a state of nature but a continuing contractual relation. … A contract for employment at will may end abruptly but it is a real and continuing contract nonetheless.” The court held the plain meaning of “contract” as defined in the Restatement (Second) of Contracts, Section 1 (1981), supports such a holding. The fact that a contract for employment at will, by definition, was for no fixed length of time did not make a difference since other contractual rights and benefits accrue to at-will employees, including the right to sue for breach in the event of nonpayment.

One-sided Arbitration Agreement Unenforceable

The Third Circuit has held that an arbitration agreement that provides for a short time period within which to bring an employment claim, requires the loser to shoulder arbitration costs, limits remedies and does not allow for recovery of attorneys fees so favors the employer that it is unconscionable. Alexander v. Anthony Int'l L.P., 2003 WL 21962955 (Aug. 19).

For two decades, Blaise Alexander and Gerald Freeman were heavy equipment and certified crane operators for a series of contractors of Hess Oil Virgin Islands Corp. at its oil refinery on St. Croix. Hess announced in June 1996 that the equipment contract had been awarded to Anthony Crane. In August 1996, Alexander, Freeman, and other prospective employees attended an orientation meeting conducted by Crane. At that meeting, Crane presented a standard form contract containing arbitration provisions that was offered as a condition of employment. Alexander and Freeman both signed the contract. The agreement to arbitrate covered “[a]ny controversy or claim arising out of or relating to” employment and calls for arbitration pursuant to the American Arbitration Association's employment dispute resolution rules. Under the agreement, an aggrieved employee had only 30 days to bring an employment-related claim against his or her employer. The agreement also limited available remedies to so-called “net pecuniary damages,” defined as back pay or reinstatement. Additionally, the agreement required the loser of an arbitration to pay the costs of the proceedings. The plaintiffs, who are black and over the age of 40, filed a charge of discrimination with the EEOC and later filed a lawsuit in May 1997, alleging violations of the Virgin Islands Wrongful Discharge Act and the Virgin Islands Civil Rights Act. Their complaint also included claims of intentional and negligent infliction of emotional distress. The company moved to stay the court proceedings pending arbitration pursuant to the agreement, but the plaintiff countered that the agreement was so one-sided as to be unenforceable. The trial court, however, granted the company's motion.

On appeal, the Third Circuit found that the arbitration agreement was both procedurally and substantively unconscionable and refused to stay the court proceedings below. As to procedural unconscionability, the court noted that “this element is generally satisfied if the agreement constitutes a contract of adhesion,” a contract drafted by a party with superior bargaining power presented to the other party on a take-it-or-leave-it basis. Here, Anthony Crane clearly possessed more bargaining power than two long-time equipment operators with limited educational backgrounds and … very narrow options for other employment.” Substantive unconscionability, the court went on, “refers to terms that unreasonably favor one party to which the disfavored party does not truly consent.” The court found that the 30-day filing deadline was “clearly unreasonable and unduly favorable” to the employer, observing that Virgin Islands law generally allows 2 years for tort claims and 6 years for contract claims. Similarly, the agreement's remedies and cost-bearing provisions unduly favored the employer. Accordingly, the court held, such an agreement is not enforceable.

Court Affirms Damages Award Against 'Cybersquatting' Employee

The Sixth Circuit has affirmed an award of $5000 in statutory damages to Ford Motor Company against an employee who registered “fordworld.com” as an Internet domain name and then tried to sell the domain name to Ford. Ford Motor Company v. Catalanotte, 2003 WL 22020036 (Aug. 28).

Peter Catalanotte registered the domain name in question in January 1997. Catalanotte knew that Ford circulates a newspaper for its employees called Ford World, the court said. Ford did not know that Catalanotte had registered the name, and he never operated a Web site on the domain. Ford learned of Catalanotte's registration of the domain name in October 2000, when he sent an e-mail to Ford management stating, in part, that he had been “receiving offers from various sources including the competition. I've indicated to the other interested parties that I'm extending this opportunity to you first before any decisions are to be made.” Catalanotte offered to sell Ford the domain name and stated that “[t]he domain name fordworld.com will be available for a short period of time.” In actual fact, the court noted, Catalanotte had not been receiving offers to purchase the name. Ford filed a lawsuit against Catalanotte under the Anticybersquatting Consumer Protection Act of 1999 (ACPA), alleging cyberpiracy, trademark dilution, trademark infringement, and false designation of origin. The ACPA prohibits registering, trafficking in, or using a domain name that is identical or confusingly similar to a distinctive trademark. It also provides for injunctive relief and actual damages or statutory damages between $1000 and $100,000 in lieu of actual damages, the court said. The trial court found that Catalanotte's action violated the ACPA and granted Ford injunctive relief and $5000 in statutory damages. Catalanotte appealed.

The Sixth Circuit affirmed the lower court. To be held liable under the ACPA, one must have a “bad faith intent to profit,” the court noted. The ACPA applies to all domain names registered before, on, or after the enactment of the law on November 29, 1999. However, actual and statutory damages are not available for violations that occurred before that date, the court said. Catalanotte contended that he could not be liable for damages since he had registered the domain name before the ACPA was enacted. Ford countered that Catalanotte could be held accountable for “trafficking in” the domain name after the law was passed. The Sixth Circuit agreed with Ford. Registering, trafficking, and using a domain name are separate offenses upon which liability can be premised, the court held. “Although damages may not be awarded for pre-enactment registration, trafficking, or use, the fact that a domain name was registered before the Act's passage does not absolve the registrant from liability for post-enactment trafficking or use,” the court explained.

Punitive Damages Award to Black Deputy Sheriff Reinstated

Affirming a finding of race discrimination, the Ninth Circuit has reinstated in full an award of punitive damages to the first black deputy sheriff in Clackamas County, OR. Bell v. Clackamas County, 2003 WL 22025134 (Aug. 20).

Carl Bell worked as a Lake Oswego police officer from February 1, 1996 until December 28, 1997 in Clackamas County. He was the first black deputy sheriff in county history. During the course of Bell's employment, his field training officer, Jeff Davis, allegedly encouraged Bell to engage in racial profiling in stopping cars, and made a number of remarks about African-Americans and other racial and ethnic minorities, as well as immigrants. Bell was later fired and he sued under Title VII, alleging that his employment had been terminated because of his race and in retaliation for his complaints on discrimination and racial profiling. A jury found for Bell and awarded damages totaling $1.4 million, including punitive damages of $250,000 against the chief deputy, and $52,000 against each of seven deputies. Subsequently, however, a judge struck down the judgment against the chief deputy, reduced the punitive damages to the others to $10,000 each, and reduced the hourly rate of the attorneys' fees, but awarded Bell $216,000 in attorneys' fees. When the county appealed, Bell cross-appealed the reduction in damages.

The Sixth Circuit upheld the jury's verdict, finding that Clackamas County's contention that the record contained no evidence of illegal retaliation to be “wholly without merit.” “[T]he temporal proximity between Bell's complaints and alleged adverse employment actions,” the court reasoned, “together with evidence of [two deputies'] contemporaneous displeasure with Bell's complaints regarding racial comments and racial profiling, provides strong circumstantial evidence of retaliation.” The court held that a jury could have “reasonably inferred” from the record evidence that the deputies shared Bell's complaints with others at a disciplinary meeting. Although Bell had previously received good reviews and positive feedback, he was given poor marks after that meeting. No notes were taken during the meeting; this fact suggested “an intent to conceal the purpose of the meeting,” the court said. “In sum, Bell offered specific and substantial circumstantial evidence in support of the jury's determination that he was terminated because of his complaints.” Accordingly, the court affirmed the jury's findings and reinstated its damages and attorneys' fees awards to Bell.

At-will Employee May Bring ' 1981 Race Claim in Seventh Circuit

Joining the Second, Fourth, Fifth, Eighth, and Tenth Circuits, the Seventh Circuit Court of Appeals has held that an at-will employee may proceed on a race discrimination claim under the Civil Rights Act of 1866, codified at 42 U.S.C. ' 1981. Walker v. Abbott Labs., 2003 WL 21956455 (Aug. 18).

In 1997, Ronald Payne, a former employee of Abbott Labs, filed a lawsuit on behalf of himself and all similarly situated African-American employees at the company. A four-count second amended complaint added Dennis Walker and Marvin Fields as new class representatives, was filed in June 1998. The second amended complaint alleged class claims for intentional race discrimination under Section 1981 and for disparate impact under Title VII of the 1964 Civil Rights Act. Important to the eventual appeal, the complaint did not allege Title VII disparate treatment. In addition, Walker and one other named plaintiff raised individual claims for intentional race discrimination in promotion and pay under Section 1981 and another employee included a Section 1981 retaliation claim, the court said. Abbott Laboratories moved in March 1999 to dismiss the Section 1981 claim on the grounds that plaintiffs failed to plead the contractual basis necessary to such a claim because they were at-will employees.

Ruling on an issue of first impression in the Seventh Circuit, the Court of Appeals held that at-will employees such as Walker could proceed on a Section 1981 claim nonetheless because their at-will employment was still sufficiently contractual in nature. Section 1981 provides that “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts … as is enjoyed by white citizens.” In Patterson v. McLean Credit Union, the Seventh Circuit observed, “the Supreme Court took a narrow view of the phrase 'make and enforce contracts,' holding that it meant ' 1981's protections extended only to the formation of a contract and not to conduct occurring after the contract was made.” The Civil Rights Act of 1991 abrogated that part of McLean when it made clear that Congress intended Section 1981's protections to extend beyond contract formation only. Citing its own precedent, the court reasoned that “[e]mployment at-will is not a state of nature but a continuing contractual relation. … A contract for employment at will may end abruptly but it is a real and continuing contract nonetheless.” The court held the plain meaning of “contract” as defined in the Restatement (Second) of Contracts, Section 1 (1981), supports such a holding. The fact that a contract for employment at will, by definition, was for no fixed length of time did not make a difference since other contractual rights and benefits accrue to at-will employees, including the right to sue for breach in the event of nonpayment.

One-sided Arbitration Agreement Unenforceable

The Third Circuit has held that an arbitration agreement that provides for a short time period within which to bring an employment claim, requires the loser to shoulder arbitration costs, limits remedies and does not allow for recovery of attorneys fees so favors the employer that it is unconscionable. Alexander v. Anthony Int'l L.P., 2003 WL 21962955 (Aug. 19).

For two decades, Blaise Alexander and Gerald Freeman were heavy equipment and certified crane operators for a series of contractors of Hess Oil Virgin Islands Corp. at its oil refinery on St. Croix. Hess announced in June 1996 that the equipment contract had been awarded to Anthony Crane. In August 1996, Alexander, Freeman, and other prospective employees attended an orientation meeting conducted by Crane. At that meeting, Crane presented a standard form contract containing arbitration provisions that was offered as a condition of employment. Alexander and Freeman both signed the contract. The agreement to arbitrate covered “[a]ny controversy or claim arising out of or relating to” employment and calls for arbitration pursuant to the American Arbitration Association's employment dispute resolution rules. Under the agreement, an aggrieved employee had only 30 days to bring an employment-related claim against his or her employer. The agreement also limited available remedies to so-called “net pecuniary damages,” defined as back pay or reinstatement. Additionally, the agreement required the loser of an arbitration to pay the costs of the proceedings. The plaintiffs, who are black and over the age of 40, filed a charge of discrimination with the EEOC and later filed a lawsuit in May 1997, alleging violations of the Virgin Islands Wrongful Discharge Act and the Virgin Islands Civil Rights Act. Their complaint also included claims of intentional and negligent infliction of emotional distress. The company moved to stay the court proceedings pending arbitration pursuant to the agreement, but the plaintiff countered that the agreement was so one-sided as to be unenforceable. The trial court, however, granted the company's motion.

On appeal, the Third Circuit found that the arbitration agreement was both procedurally and substantively unconscionable and refused to stay the court proceedings below. As to procedural unconscionability, the court noted that “this element is generally satisfied if the agreement constitutes a contract of adhesion,” a contract drafted by a party with superior bargaining power presented to the other party on a take-it-or-leave-it basis. Here, Anthony Crane clearly possessed more bargaining power than two long-time equipment operators with limited educational backgrounds and … very narrow options for other employment.” Substantive unconscionability, the court went on, “refers to terms that unreasonably favor one party to which the disfavored party does not truly consent.” The court found that the 30-day filing deadline was “clearly unreasonable and unduly favorable” to the employer, observing that Virgin Islands law generally allows 2 years for tort claims and 6 years for contract claims. Similarly, the agreement's remedies and cost-bearing provisions unduly favored the employer. Accordingly, the court held, such an agreement is not enforceable.